Changing times

The good news is that the current business in the electronic component and subsystem industry will probably continue to improve, but the bad news is most of the jobs lost in the Great Recession (GR) aren’t ever coming back.

At recent events such as Embedded Systems and the Electronic Distribution Show, every company I spoke to was doing double-digit business percentages over last year, some to the point they were concerned that the demand was simply a bubble caused by pipeline filling. The fact is, while there may be an element of truth to the supply-chain argument, it doesn’t speak to the situation as a whole because you don’t need 6 months to fill a pipeline, and most of the companies responding have been experiencing increased sales for at least that long.

So while there are certainly some warehouse and inventory issues in this recent business surge, the reality is that the electronic industry’s mainstays – industrial, military, and medical – are continuing to grow worldwide. Even consumer applications are exploding again as many applications that did not have sophisticated electronics (or any at all) now contain them. From white goods to smart meters to improved industrial process control to vehicles to the home, more application solutions contain electronics than ever before, and those solutions all require electronics to realize.

In light of the uncertainty as to the nature of the new business and its future, some manufacturers are taking different tacks in the management of their business. Every company is using productivity tools to their utmost, and an employee today does the work that several people did just a few years ago. Some companies are not hiring at all to fulfill their orders, and are simply extending the lead times for delivery. I have heard ridiculous lead times as high as 52 weeks for some components and subsystems. Some companies are hiring temporary workers to address their demand for product, and the most visionary are actually hiring new long-term employees.

When automation first came on the scene a few decades ago, the first casualties were blue-collar workers in repetitive tasks. Some white-collar jobs were lost, but as the office runs as much on politics as it does on money, firing activity in the cubicles was (relatively) limited to those whose positions were blatantly obsolete (razor-blade layout artists in the publishing business, for example) or those in the corporate structure who had no obvious purpose. But the guy in the mailroom who knew where the tradeshow exhibits were stored or the popular admin who could get the copier to operate properly were spared.

The Great Recession changed that, and no job was sacred, no matter how much internal proprietary information (an old standard for worker job security) the employee held. Companies cut from 20% to 60% of their workforce to simply stay afloat. Business historians call Jack Welch of GE “Chainsaw Jack” for his "20-70-10" system, where the bottom 10% of the GE workforce was considered nonproductive and fired. He’d be considered a piker in the area of corporate efficiency today.

What this all boils down to is that business can do a lot more with a lot less, and most of the jobs lost in recent years have been to task obsolescence as much as they have been to financial issues. Now that the business is back, companies no longer want to hire those old positions back, they want to hire new workers with new skills to address the new demands of the industry. This means that workers who retrain themselves actually have a very good chance to get a new job in the expanding new market, but if you are looking for your old job back, you are in for a long and hard uphill battle that may never result in a return to the workplace.

The biggest problem, however, is task overload by the existing shrunken workforce. Many employees went into work-survival mode during the GR, working double- and triple-overtime to ensure their companies stayed above water during the worst times with too-lean staffing. These people are still working at fever pace with too little bandwidth for new tasks and too much stress over their current work. They can’t scale back from their frenetic pace of last year until their organizations hire more people, and the companies aren’t looking to replace any of the old workers as they are still leery of the marketplace. This is creating a vicious workplace Catch-22 and burnout timebomb in the labor force.

The bottom line is that the market is getting better, stability is coming, but if business does not move into the next phase of post-GR market development properly with real job creation it runs the risk of imploding and causing a delay in the recovery.